Best S&P 500 Index Funds of 2026: VOO vs IVV vs SPLG vs FXAIX Compared
The S&P 500 index has crushed most actively managed funds for over four decades, and in 2026 you have more ways than ever to own it cheaply. But not every "S&P 500 fund" is created equal. Fees, tax structure, brokerage compatibility, and even how the fund lends out securities can quietly cost you thousands over a lifetime.
Why S&P 500 index funds still dominate portfolios in 2026
The S&P 500 tracks the 500 largest US public companies, roughly 80% of the total US stock market by value. Since 1957 it has returned about 10% annually before inflation, and over the last 20 years the SPIVA scorecard shows more than 87% of large-cap active managers failed to beat it. The math is unforgiving: a 1% fee gap compounds into hundreds of thousands of dollars over a working life. That is why an S&P 500 index fund remains the default core holding for millions of retail investors in 2026.
The five S&P 500 funds worth considering
Almost every major asset manager sells an S&P 500 tracker. The differences are small in isolation and huge in aggregate. Here are the five funds most retail investors should consider in 2026, sorted by expense ratio.
| Fund | Ticker | Type | Expense ratio | AUM (USD) |
|---|---|---|---|---|
| SPDR Portfolio S&P 500 ETF | SPLG | ETF | 0.02% | $45B+ |
| Vanguard S&P 500 ETF | VOO | ETF | 0.03% | $1.3T+ |
| iShares Core S&P 500 ETF | IVV | ETF | 0.03% | $550B+ |
| Fidelity 500 Index Fund | FXAIX | Mutual fund | 0.015% | $650B+ |
| Schwab S&P 500 Index Fund | SWPPX | Mutual fund | 0.02% | $100B+ |
| SPDR S&P 500 ETF Trust | SPY | ETF (UIT) | 0.0945% | $650B+ |
VOO vs IVV vs SPLG: three near-identical ETFs, one meaningful choice
VOO (Vanguard)
- Cheapest of the big three at 0.03% until SPLG undercut it
- Largest S&P 500 ETF in the world by AUM
- Traded most heavily by long-term buy and hold investors
- Vanguard structure means dividends distribute quarterly, no phantom gains
IVV (iShares)
- Same 0.03% fee as VOO with slightly tighter bid-ask spread
- iShares Core lineup pairs cleanly with IEFA and IEMG for a global portfolio
- Available commission-free at nearly every US broker
- Preferred by advisors building model portfolios on iShares platforms
SPLG (SPDR)
- Cheapest S&P 500 ETF at 0.02% expense ratio
- Low share price near $80 makes fractional buying easier
- Smaller AUM than VOO or IVV but liquid enough for retail size
- Best pick if you dollar-cost average small amounts weekly
Mutual fund or ETF? The tax angle matters
FXAIX is technically cheaper than every S&P 500 ETF at 0.015%, but you can only buy it inside a Fidelity account, and mutual funds trade once per day at NAV rather than intraday. In a taxable brokerage account the bigger issue is that traditional US mutual funds can distribute capital gains to shareholders even in years you did not sell. ETFs use in-kind creation and redemption to almost entirely avoid this. If the account is a 401(k), IRA, or an RRSP, the tax difference disappears and the cheaper mutual fund is fine. In a taxable account, VOO or SPLG usually wins on after-tax return.
How to pick the right S&P 500 fund
DECISION FLOW
- If the account is Canadian (TFSA, RRSP, non-registered), use a Canadian-listed S&P 500 ETF like VFV, XUS, or ZSP to avoid US estate exposure and simplify tax reporting.
- If the account is a US 401(k) or IRA at Fidelity, choose FXAIX. It is the cheapest option and taxes are deferred anyway.
- If the account is US taxable and you buy in small weekly amounts, choose SPLG for the low share price and lowest ETF fee.
- If the account is US taxable and you invest lump sums or already own iShares products, choose IVV or VOO for maximum liquidity.
- Never pick SPY unless you are actively trading or writing covered calls.
How Canadian investors buy the US-listed funds
US-listed ETFs like VOO and IVV are technically buyable from a Canadian brokerage, but you pay a currency conversion each way (often 1.5% at Wealthsimple or Questrade unless you use Norbert's Gambit) and you owe 15% US withholding tax on distributions unless held in an RRSP under the Canada-US tax treaty. For most Canadians, the Canadian-listed equivalents (VFV, XUS, ZSP) are simpler and only marginally more expensive. If you already hold US-listed VOO in your RRSP, keep it there - it is the most tax-efficient home. See our TFSA and US stocks guide for the treaty rules.
Common pitfalls to avoid
- Buying SPY instead of SPLG or VOO for a long-term core position (3x higher fees).
- Holding US-listed VOO in a TFSA and losing 15% of every dividend to the IRS.
- Owning FXAIX alongside VOO and IVV thinking you are "diversifying" - they hold the same 500 stocks.
- Ignoring tracking difference. A fund with a 0.03% fee that trails the index by 0.10% is worse than a 0.05% fund that trails by 0.05%.
- Panic selling in a drawdown. Since 1928 the S&P 500 has recovered from every bear market, but only investors who held or rebalanced captured the recovery.
Frequently asked questions
Is VOO or IVV better in 2026?
They are effectively identical: both charge 0.03%, both hold the same 500 stocks in the same weights, and both are enormously liquid. Pick VOO if you already use Vanguard products, IVV if you use iShares. The tracking and returns are indistinguishable over any reasonable holding period.
What is the cheapest S&P 500 index fund right now?
Fidelity's FXAIX at 0.015% is the cheapest mutual fund, and SPLG at 0.02% is the cheapest ETF. Both track the same index. Choose FXAIX if you already hold a Fidelity account; choose SPLG if you need intraday trading or a broker other than Fidelity.
Can Canadians buy VOO in their TFSA?
Yes, most Canadian brokers allow it, but VOO pays US-source dividends that are subject to 15% US withholding tax in a TFSA (the Canada-US tax treaty exempts only RRSPs, not TFSAs). For dividend-heavy US holdings, an RRSP is more tax-efficient. Many Canadians prefer VFV, XUS, or ZSP for TFSAs to keep tax simple.
Do S&P 500 index funds pay dividends?
Yes. The S&P 500 has an aggregate dividend yield of about 1.3% in 2026. ETF distributions are usually quarterly (VOO, IVV, SPLG all pay in March, June, September, and December). Mutual funds like FXAIX also distribute quarterly, and you can set them to automatically reinvest for compounding.
Should I own an S&P 500 fund alongside a total US market fund like VTI?
Not really. The S&P 500 already makes up around 82% of VTI by weight, so pairing them just gives you a very small extra tilt toward mid and small caps. Pick one as your US core: VTI for slightly broader coverage, VOO/IVV/SPLG if you want the pure large-cap benchmark.
How much of my portfolio should be in the S&P 500?
A common Boglehead default is 40 to 60% in a total US or S&P 500 fund, balanced with international equity and bonds. If you are Canadian, cap US exposure so your home-country allocation stays intentional. Wealth Rebalancer shows this split live on your dashboard so you can spot drift before it gets expensive.